Itc Limited · NSE:ITC
Itc — Investor Presentation (February 2012)
64 slides from Itc's investor presentation, February 2012
Slide 1: ITC Limited
ITC Limited One of India’s Most Admired and Valuable Companies 1
Slide 2: Performance Track Record
Performance Track Record The last 15 years (` Crs.) Cagr 95-96 95-96 10-11 to 10-11 Net Turnover 2,536 21,168 15.2% PBDIT 584 7,972 19.0% PBIT 536 7,316 19.0% PBT 452 7,268 20.3% PAT 261 4,988 21.7% EPS ` /Share * 0.35 6.49 21.4% Net Worth 1,121 15,953 19.4% Capital Employed 1,886 16,854 15.7% Marke
Slide 3: ITC's ranking
ITC’s ranking Amongst all listed private sector cos. PBT: No. 5 PAT: No. 5 Market Capitalisation: No. 3 3
Slide 4: ITC Consistently in the Market Cap. Top League
ITC Consistently in the Market Cap. Top League Mar-96 Jan-12 Rank Rank Tata Motors Ltd. 1 Hindustan Unilever Ltd. 2 10 Reliance Industries Ltd. 3 1 Tata Steel Ltd. 4 Bajaj Holdings & Invst. Ltd. 5 Larsen & Toubro Ltd. 6 Hindalco Industries Ltd. 7 ITC Ltd. 8 3 Grasim Industries Ltd. 9 HDFC Ltd. 10 7
Slide 5: ITC ranked 6th amongst global consumer goods companies
ITC ranked 6th amongst global consumer goods companies in sustainable value creation during 2005-09 (Boston Consulting) 5
Slide 6: ITC
ITC One of India’s most valuable and admired companies Rated by BCG amongst top 10 Consumer Goods companies in the world in terms of Total Shareholder Returns (TSR) during 2005-09 One of the foremost in the private sector in terms of : Sustained value creation (BT-Stern Stewart survey) Operating pro
Slide 7: Awards & Accolades (1)
Awards & Accolades (1) • ITC Chairman Mr. Y C Deveshwar conferred the Padma Bhushan • Mr. Y C Deveshwar conferred the Global Leadership Award by the US India Business Council of the US Chamber of Commerce • The only Green Luxury Hotel chain in the world where every Hotel is LEED (Leadership in Energ
Slide 8: Awards & Accolades (2)
Awards & Accolades (2) • Sustainability Leadership Award 2007 conferred on Chairman Y C Deveshwar by the Sustainability Forum, Zurich and SAM/SPG at the International Sustainability Leadership Symposium • Ryutaro Hashimoto Incentive Prize 2007 for Environment & Development from the Asia Pacific Foru
Slide 9: Accolades & Awards (3)
Accolades & Awards (3) • e-Choupal initiative wins global recognition: – World Development Report 2008 published by World Bank – Stockholm Challenge Award 2006 in the Economic Development category which recognises initiatives that leverage Information Technology to improve living conditions and fost
Slide 10: ITC's Vision
ITC’s Vision Sustain ITC’s position as one of India’s most valuable and admired corporations through world class performance, creating growing value for the Indian economy and the Company’s stakeholders 10
Slide 11: ITC's Vision
ITC’s Vision Make a significant and growing contribution towards : • mitigating societal challenges • enhancing shareholder rewards By • creating multiple drivers of growth while sustaining leadership in tobacco and • focusing on Triple Bottom Line Performance Enlarge contribution to the Nation’s -
Slide 12: Key Corporate Strategies
Key Corporate Strategies • Focus on the chosen business portfolio – FMCG; Hotels; Paper, Paperboards & Packaging; Agri Business, Information Technology • Blend diverse core competencies residing in various businesses to enhance the competitive power of the portfolio • Position each business to attai
Slide 13: ITC Business Portfolio
ITC Business Portfolio FMCG Cigarettes Foods Personal Care Lifestyle Retailing , Education & Stationery Matches Incense Sticks Paper & Agri Information Hotels Packaging Technology Business
Slide 14: Strategy of Organisation to manage diversity of Portfolio
Strategy of Organisation to manage diversity of Portfolio Formal 3-tiered governance structure: Board of Directors : Comprising executive (4) and non-executive directors (12) Strategic supervision Corporate Management Committee : Comprising executive directors and senior managers Strategic managemen
Slide 15: FMCG - Cigarettes
FMCG - Cigarettes 15
Slide 16: ITC's Cigarettes Business
ITC’s Cigarettes Business Market leadership Powerful brands across segments Leadership in all segments - geographic & price Extensive FMCG distribution network • Direct servicing of 1,00,000 markets & 2 million retail outlets World-class state-of-the-art technology and products • Investment – `20 bi
Slide 17: Cigarettes: Growth potential
Cigarettes: Growth potential Cigarettes account for less than 15% of tobacco consumed in India unlike world pattern of 85% due to prolonged punitive taxation • Cigarettes (15% of tobacco consumption) contribute the bulk of Revenue to the Exchequer from tobacco sector 51% of adult Indian males consum
Slide 18: Per Capita Consumption of Tobacco in India
Per Capita Consumption of Tobacco in India (gms per year) 1256 1145 743 438 461 468 China USA Pakistan Nepal India World Source:World Cigarettes – ERC Statistics, Tob Board & Industry Estimates – gms/Yr Per Capita consumption is ~ 60% of World Average
Slide 19: Per Capita Cigarette Consumption – per annum
Per Capita Cigarette Consumption – per annum 2028 1646 1196 391 274 172 99 Japan China USA Pakistan Nepal Bangladesh India rd Source: The Tobacco Atlas – 3 Edition Per Capita consumption in India < 11% of World average 19
Slide 20: Cigarettes: Challenges
Cigarettes: Challenges Competitive context • Competition including international majors becoming more active • Domestic illegal volumes still very strong. Along with smuggled contraband, has emerged as substantive competition Regulatory & Taxation • New graphic health warnings notified and change to
Slide 21: Future Growth & Value Capture
Future Growth & Value Capture New FMCG Initiatives 21
Slide 22: Strategic Rationale
Strategic Rationale Blend multiple competencies residing within the ITC Group to create new avenues of growth Best fit between internal capabilities and emerging market opportunities Each segment enhances the depth and width of ITC’s FMCG distribution capability Business model retains critical eleme
Slide 23: Branded Packaged Foods
Branded Packaged Foods Biscuits, Staples, Snacks, Confectionery, Ready to Eat & Noodles
Slide 24: Branded Packaged Foods
Branded Packaged Foods Amongst one of the fastest growing Foods business in the country in 6 chosen categories • Staples, Biscuits, Snack Food, Noodles & Pasta, Confectionery and Ready to Eat (RTE) Driven by six brands- • Aashirvaad – Staples (Wheat flour, Salt, Spices), RTE • Sunfeast – Biscuits, N
Slide 25: Branded Packaged Foods
Branded Packaged Foods • Atta (wheat flour) – #1 in Branded packaged Atta among national players • Biscuits – #3 All India • Noodles – #2 All India (Urban) • Confectionery – Close #2 in operating segments • Ready-to-Eat – #1 in RTE – Gourmet & popular cuisines - leveraging cuisine expertise of Hotel
Slide 26: Education & Stationery
Education & Stationery Products • Notebooks • Writing Instruments (Pen, Pencils etc) • Scholastic products • Business & Copier paper Brands • Classmate • Paperkraft • Colour Crew
Slide 27: Paperkraft Premium Business Paper
Paperkraft Premium Business Paper • Environment Friendly Copier Paper - Utilizes Ozone Treated elemental chlorine free technology – first of its kind in India made by ITC • Whitest and Brightest 75 GSM paper for office and home use Range of premium pens from Paperkraft • Three pens are available und
Slide 28: Education & Stationery Products Business
Education & Stationery Products Business Leverages print and paper know-how. Forward linkages with new paper capacity (already commissioned). An emerging (currently ` 8100 cr Stationery) market in India - growth driven by increasing cross-cultural exposure, goverment spending on education • Mostly c
Slide 29: Lifestyle Retailing
Lifestyle Retailing 2 major brands: Wills Lifestyle - a fashion destination, offers a choice of Wills Signature designer wear, Wills Classic work wear, Wills Classic ‘Luxuria’ super-premium formals for men, Wills Sport relaxed wear, Wills Clublife evening wear & fashion accessories John Players - of
Slide 30: Lifestyle Retailing
Lifestyle Retailing Leverages trademark and services expertise of hotels Upmarket product range available in exclusive Wills Lifestyle stores (80) and multi-branded outlets/ large format retail stores across the country Strong distribution network in place for the mid-market brand ‘John Players’ • a
Slide 31: Matches, Incense Sticks
Matches, Incense Sticks
Slide 32: Safety Matches
Safety Matches Current industry consumer spend estimated at `2250 crores p.a. for 22 billion match boxes Fragmented supply base arising from policy of reservation for small scale industry Mass market has moved to ` 1.00 price point. ITC markets its brands with value added products across each price
Slide 33: Incense sticks (Agarbattis)
Incense sticks (Agarbattis) Current industry consumer spend estimated at over ` 3100 crores p.a. Fragmented supply base arising from policy of reservation for small scale industry ITC markets its brands with value added products across each price point • ‘Mangaldeep’ : second largest national brand
Slide 34: Personal Care
Personal Care Our brands: • Essenza Di Wills • Fiama Di Wills • Vivel • Superia Product portfolio: • Fine fragrances • Soaps • Shampoos • Fairness Cream • Conditioners • Shower Gels • Talc • Hair Serum 34
Slide 35: Personal Care Products
Personal Care Products Current market size estimated at over ` 29,000 crores (growing at 12% p.a.) Portfolio approach straddling all consumer segments with 4 umbrella brands • Essenza Di Wills (Prestige) • Fiama Di Wills (Premium) • Vivel (Mid) • Superia (Popular) Products well received in the marke
Slide 36: Hotels & Tourism
Hotels & Tourism 36
Slide 37: Hotels & Tourism industry
Hotels & Tourism industry Foreign arrivals into India: 5.8 million appx. Vs. 55.7 million in China • The two nations were on par 2 decades ago Today, Beijing alone has as many hotel rooms as the whole of India India’s luxury rooms availability lower than even smaller East Asian countries Huge potent
Slide 38: Indian Hotel Industry
Indian Hotel Industry Current supply – appx. 140,000 rooms of which 5 Star category accounts for appx. 25% India needs an additional 50,000 rooms in the next 2/3 years to service projected tourist arrivals Present mismatch between supply and demand expected to persist over the short term As infrastr
Slide 39: Hotels
Hotels • No 2 in Size • No 1 in Profitability 39
Slide 40: ITC-Welcomgroup: fastest growing Hospitality chain in India
Lotus Pavilion, ITC Gardenia, Bengaluru Private Dining Room , The Peacock Suite, ITC Gardenia ITC-Welcomgroup: fastest growing Hospitality chain in India Over 100 properties across 80 destinations • 4 Brands – ITC Hotels, WelcomHotel, Fortune & WelcomHeritage Rooms No of Hotels Owned/ Managed Total
Slide 41: Paperboards, Paper & Packaging
Paperboards, Paper & Packaging 41
Slide 42: Paperboards & Packaging Business
Paperboards & Packaging Business • No 1 in Size • No 1 in Profitability • No 1 in Environmental Performance 42
Slide 43: Indian Paperboard market
Indian Paperboard market Annual paperboard demand – appx. 2 million tonnes Fragmented capacity & obsolete technology Low per capita usage at around 9 kgs p.a. (world average – over 55 kgs p.a.) Indian paperboard market growing at 8% p.a. Value Added Coated board - the fastest growing segment (15% p.
Slide 44: ITC's Paperboards Business
ITC’s Paperboards Business Market leader in growth segment - value added coated boards World-class contemporary technology • Ozone bleached Pulp Mill fully operational – one of its kind in Asia meeting world-class environmental standards Internationally competitive quality and cost Social farm fores
Slide 45: ITC's Paperboards & Packaging businesses
ITC’s Paperboards & Packaging businesses Capacity expansion projects installed – at optimum capacity utilization • 120000 TPA Pulp Mill – Machine stabilised • 100000 TPA paper machine (to support Education & Stationery business growth plans) Machine stabilized • Investment in 100,000 TPA paperboards
Slide 46: Agri Businesses
Agri Businesses - Leaf Tobacco - Agri Commodities 46
Slide 47: Agri Business
Agri Business • No. 1 in Leaf Tobacco • No 2 in Agri commodities • Pioneer in rural transformation 47
Slide 48: Indian Leaf Tobacco industry
Indian Leaf Tobacco industry India – the second largest producer of tobacco However, India’s share is only 10% in world tobacco trade Upgradation of tobacco consumption from other formats to cigarettes will enable: • growing domestic base & larger opportunities for value added exports ITC – India’s
Slide 49: ITC's Agri Commodity Business
ITC’s Agri Commodity Business Farm linkages in 14 States covering Soya, Wheat, Marine products, Coffee etc. Focus on value added agri commodities Unique Customer Relationship Management programme in commodity exports & for domestic customers Leveraging Information Technology for the transformational
Slide 50: e-choupal: Strategic Thrust
e-choupal: choupal: Strategic Thrust Procurement: cost & quality optimisation • strategic sourcing support to the Foods business (support creation of verticals in wheat, corn, potato etc.) • cost-effective sourcing for exports/domestic external business Financial Services • insurance (focus: weather
Slide 51: "Triple Bottom Line" Performance
“Triple Bottom Line” Performance 51
Slide 52: ITC - Key Financials – 2010/11
ITC - Key Financials – 2010/11 FY 10/11 FY 09/10 ` crs Goly % Actuals Actuals Gross Turnover 30604 26260 16.5 Net Turnover 21168 18153 16.6 PBDIT 7454 6313 18.1 PBIT 7316 6080 20.3 PBT 7268 6015 20.8 PAT 4988 4061 22.8
Slide 53: 2010/11: Segment Revenues
2010/11: Segment Revenues ` crores Full Year 2010-11 2009-10 Goly Segment Revenue (Net) a) FMCG - Cigarettes 10574 9321 13.4 - Others 4472 3634 23.1 Total FMCG 15045 12955 16.1 b) Hotels 1001 851 17.6 c) Agri Business 4748 3862 22.9 d) Paperboards, Paper & Packaging 3507 3108 12.9 Total 24301 20776
Slide 54: 2010/11: Segment Results
2010/11: Segment Results ` crores Full Year 2010-11 2009-10 Goly Segment Results a) FMCG - Cigarettes 5767 4938 16.8 - Others (298) (350) 14.9 Total FMCG 5469 4589 19.2 b) Hotels 267 217 23.0 c) Agri Business 566 448 26.5 d) Paperboards, Paper & Packaging 819 684 19.7 Total 7121 5937 19.9 Less : i)
Slide 55: 2010/11: Segment Capital Employed
2010/11: Segment Capital Employed ` crores Full Year 2010-11 2009-10 Goly Capital Employed a) FMCG - Cigarettes * 3062 2961 3.4 - Others 1897 1666 13.8 Total FMCG 4959 4627 7.2 b) Hotels 2728 2457 11.0 c) Agri Business 1562 1580 -1.1 d) Paperboards, Paper & Packaging 3770 3711 1.6 Total Segment Capi
Slide 56: ITC - Key Financials – Q3 2011/12
ITC - Key Financials – Q3 2011/12 ` Crs Q3 11/12 Q3 10/11 Goly % Actuals Actuals Gross Turnover 8841 7936 11.4 Net Turnover 6195 5424 14.2 PBDIT 2666 2210 20.6 PBIT 2492 2042 22.0 PBT 2477 2031 21.9 PAT 1701 1389 22.5
Slide 57: Q3 2011/12: Segment Revenues
Q2 2011/12: Segment Revenues ` crores Q2 Q3 Q3 Actual Last Year GOLY(%) 2011-12 2011-12 2010-11 Segment Revenue (Net) 2968 a) FMCG - Cigarettes 3233 2773 16.6 1341 - Others 1371 1102 24.4 4309 Total FMCG 4604 3875 18.8 211 b) Hotels 279 282 (1.0) 1435 c) Agri Business 1139 1038 9.8 1005 d) Paperboar
Slide 58: Q3 2011/12: Segment Results
Q3 2011/12: Segment Results ` crores Q2 Q3 Q3 Actual Last Year GOLY(%) 2011-12 2011-12 2010-11 Segment Results 1729 a) FMCG - Cigarettes 1844 1533 20.3 (56) - Others (47) (74) 36.6 1673 Total FMCG 1798 1459 23.2 43 b) Hotels 102 89 14.8 239 c) Agri Business 142 129 9.7 290 d) Paperboards, Paper & Pa
Slide 59: YTD Dec'11: Segment Revenues
YTD Dec’11: Segment Revenues ` crores YTD Dec '11 Goly(%) 2011-12 2010-11 Segment Revenue (Net) a) FMCG - Cigarettes 9075 7806 16.2 - Others 3909 3159 23.7 Total FMCG 12984 10965 18.4 b) Hotels 720 700 2.8 c) Agri Business 4281 3666 16.8 d) Paperboards, Paper & Packaging 2943 2590 13.6 Total 20928 1
Slide 60: YTD Dec'11: Segment Results
YTD Dec’11: Segment Results ` crores YTD Dec '11 Goly(%) 2011-12 2010-11 Segment Results a) FMCG - Cigarettes 5150 4296 19.9 - Others (179) (230) 22.2 Total FMCG 4971 4066 22.2 b) Hotels 196 167 17.7 c) Agri Business 538 467 15.2 d) Paperboards, Paper & Packaging 741 626 18.5 Total 6446 5325 21.0 Le
Slide 61: YTD Dec'11: Segment Capital Employed
YTD Dec’11: Segment Capital Employed ` crores Q2 Q3 Q3 Actual Last Year GOLY(%) 2011-12 2011-12 2010-11 Capital Employed 3899 a) FMCG - Cigarettes* 4176 3394 23.0 1924 - Others 1852 1719 7.8 5823 Total FMCG 6028 5113 17.9 2989 b) Hotels 3061 2600 17.7 1487 c) Agri Business 1559 1479 5.4 4006 d) Pape
Slide 62: Social Impact
Social Impact • Direct employment ITC Group : 29,000 • Indirect employment across the value chain : 5 million • e-choupal: world’s largest rural digital infrastructure serving nearly 4 million farmers • Social and Farm forestry initiative has greened over 125,000 hectares & provided approx. 51 milli
Slide 63: Environmental Impact
Environmental Impact • Carbon positive enterprise – 6th year in a row – Sequestering/storing twice the amount of CO2 that the company emits • Water positive - 9th year in a row – Creating three times more rainwater harvesting potential than ITC’s net consumption • Solid waste recycling positive – 4t
Slide 64: Forward-looking Statements
Forward-looking Statements Statements in this presentation describing the Company’s objectives, future prospects, estimates, expectations etc. may be “forward looking statements” within the meaning of applicable securities laws and regulations. Investors are cautioned that “forward looking statement